June 24, 2010

IS RUSSIA IN DECLINE?
In this video, Pareg Khanna makes the case that while Russia may appear to be strong in the short term, there are a number of factors that suggest that there is potential for Russian Economic decline in the long term.

As we have already observed in both India and China there appears to be a familiar pattern of increasing economic disparity between the rich and poor in Russia and the potential for a populist backlash is possible.

DOES A NEW TOMORROW FOR RUSSIA LIE WITH ITS YOUTH?
The youth in Russia today, those who have grown up in a free-market economy and are distanced by time from the vestiges of the commend economy that ruled the lives of their parents and grandparents appear to be where the hope for a new tomorrow in Russia.

RUSSIA’S ECONOMIC TRANSITION: QUESTIONS TO CONSIDER

How have the vestiges of Imperial/Tsarist and Totalitarian/Soviet rule influenced the Economy in Russia over the past two decades?

Can Putin’s Autocratic rule impose its will on the economy to continue to deliver the growth required to appease the average Russian Citizen?

Will social unrest boil over as a result of the increasing disparity between rich and poor in Russia?

Will Russia’s dependence on oil as the primary source of economic stability undermine the development of a more resilient and diversified economy?

How do the youth in Russia see the economy of the country unfolding over the next 20 years?

In his paper, Russia: Behind the Headlines, Russian journalist Alexi Pankin, provides a historical context for the political ebbs and flows in Russia from the time of the dissolution of the Soviet Union in 1991.

FROM TOTALITARIAN REGIME to THE DISMANTLING OF SOVIET RULE to a TRAGIC MISSED OPPORTUNITY through ECONOMIC SHOCK THERAPY culminating in AUTOCRATIC RULE with the CONSENT OF THE GOVERNED

Here, Pankin asserts that Russia’s greatest achievements in Democracy happened under Gorbachev in his dismantling of the Totalitarian system:

Pankin further asserts that in 1991, with fall of the Soviet Union, the United States was presented with a significant Opportunity to bring Western Style democracy to Russia as it had done previously in Japan and Germany:

Given that this opportunity was missed, Pankin outlines how Yeltsin’s Chaotic “Economic Shock Therapy” and Corrupt Privitization programs crippled the country creating an overwhelmingly perception of Western style Democracy:

Which ultimately culminated in the emergence of Vladimir Putin as an Autocratic ruler who has the “Consent of the Governed” in establishing a Vertical of Power in the Kremlin

Valadimir Posner, Russian host of the “Posner Show” suggests that Putin has become Russia’s Golden Boy and that the opposition cannot expect to get many votes.

AUTHORITARIAN PERPETUITY OR EVENTUAL DEMOCRACY?

Despite the seemingly insurmountable odds, Gary Kasparov is convinced that- over time – Western style Democracy will ultimately prevail in Russia.

Dmitri Trenin appears to agree with Kasparov suggesting that Russia’s evolving Capitalist society could ultimately develop into a Democracy.

However, as David Dollar outlines here, is important to remember that the general pattern of authoritarian regimes opening up their markets and eventually ending up with Democratic Government have one important exception: Countries that sit on large reserves of oil.

RUSSIA’S POLITICAL TRANSITION: QUESTIONS TO CONSIDER

How have the vestiges of Imperial/Tsarist and Totalitarian/Soviet rule influenced Politics in Russia over the past two decades?

Do the Russians equate the chaos and corruption of Yeltsin’s rule with Western Democratic Rule?

How do the Russians feel about the current Authoritarian “Vertical of Power” of Vladimir Putin? Would they prefer a different kind of Governmental System?

Can Russia continue to prosper economically without reforming its existing Authoritarian system of Government?

Will Putin remain Prime Minister for life or will the Free-Market Consumers of Russia today transform into Pro-Democratic Citizens in the future?

As has been the case in prior residencies, upon completing your blog pre-reading we ask that you provide us with a baseline on the Social Relational Model for Russia.

Russia’s unfolding of history from Imperial Power to Totalitarian Rule through the Dismantling of the Soviet System and the emergence of Nationalist pride and Autocratic Rule has been replete with turmoil and abrupt transitions.

BBC Journalist Jonathon Dimbleby chronicles his journey at a particularly critical stage in Russia’s history trying to understand it, getting a sense of the past and the present, meeting a wide range of people in order to understand what Russia might be like in the Future.

In the following excerpts from Dimbleby’s journey we learn:

What it was like for the average person to live in communal apartments crammed with over 100 people to every floor and how Russians living in this situation have learned to separate their “life” from their “every-day life.”

How the hand-to-mouth existence of peasants on the margins of the economy have endured incredible hardship and famine and how, to this day, despite a lack of state support for their collectives,they remain as stoical and tenacious as they ever have been.

TO NEWFOUND FREEDOM AND AUTONOMY

On his epic journey, Dimbleby also explored:

How things have changed in Russia since the collapse of Communism and how the Russian people feel about their newfound freedoms.

How the new found capitalist autonomy in Russia is influencing perspectives on freedom and democracy. In Russia, “Democracy is Death” they say, and the freedom they enjoy is found outside the Vertical Bureaucracy of Putin’s Kremlin.

RUSSIANS EMBRACE FREEDOM BUT NOT WESTERN DEMOCRACY

Here Business Week’s Steve LeVine argues that newly liberated Russians have never in their history lived better than they are now. More Russians today are better off than they have ever been. So they are happy to indulge in their newfound freedom and support Putin’s increasingly authoritarian government.

Dibmleby explored this same question further with the next generation of Russians and found that many of them are also more than willing to back a strong autocratic leader to secure their position of power on the world stage.

RUSSIA’S SOCIETAL TRANSITION: QUESTIONS TO CONSIDER

Does Russian society really believe that things have never been better than they are today?

How comfortable does Russian society feel about navigating uncertainty to capture economic opportunity when its past is rooted in the planned and predictable path enforced under Soviet Rule?

How have the vestiges of Imperial/Tsarist and Totalitarian/Soviet rule influenced Society’s perspectives on freedom and democracy in Russia over the past two decades?

Why is Russian society so willing to support a strong Autocratic leader like Vladimir Putin? Will Russian Society always default to going along with the Czar?

Does the the perceived separation of the free-market consumer society from the Vertical of Power in the Kremlin present any issues for Russian Society today and in the future?

Just as we examined the impact of culture and civilization on England, the Middle East, India and China through the prism of transitions and tensions, the CCL course in St. Petersburg will be grounded in the key transitions that Russia is experiencing and the tensions that have emerged as a result.

In this video excerpt, Dmitri Trenin, Author of “Getting Russia Right” provides a backdrop of the following transitions that Russia is currently undergoing.

1910-1913: Imperial Russia is the largest state territory on earth, with the largest population in Europe and the world’s biggest army. It is Europe’s chief source of agricultural exports, and with rich mineral resources, the chief recipient of foreign investment.

1914-1916: During World War I, Germany invades Russia. Six million men are mobilized, and Russia’s factories converted to a war footing. Nicholas II takes personal command of the army at the front, leaving his new government leaderless in the capital. Conscription, heavy loss of life, and hyperinflation lead to terrible social distress. By 1916 Russia has lost 3.5 million men.

1917: Military incompetence, inflation, low wages, and food shortages add to growing dissatisfaction with the monarchy. Demonstrations in the capital lead to a general strike and Nicholas II’s abdication. A provisional government fails to restore order. Led by Vladimir Lenin, the Bolsheviks seize power and establish an emergency dictatorship that aims to abolish private property and socialize the state.

1918-1920: Lenin unilaterally ends the war with Germany. Russia descends into a three-year civil war between the “red” Bolsheviks and the “white” counterrevolutionary armies for control of the former empire. The capital is moved to Moscow, and the Communist Party machine emerges from Bolshevik ranks. The siege economy and state monopoly leaves production at a virtual standstill and the cities without food. Russia’s postwar industrial output is less than 20 percent of the prewar level, with whole sectors of the economy destroyed. Traditional Russian society is virtually destroyed, providing a blank slate on which the new institutions of a new Soviet state are created.

1929-1940: Stalin overturns the NEP and begins the collectivization of agriculture. Confiscation of private farms sparks widespread protests. The First Five-Year Plan is passed in a program to modernize the USSR through forced industrialization. Stalin uses terror backed by purges, show trials, executions, and mass deportations to the Gulag to secure his rule. Victims of Stalin’s mass arrests, forced to work as prisoner employees in prison camps, form a core of the Soviet economy. By 1939 the Gulag is the largest employer in Europe. As the Depression hits the rest of the world, the Soviet economy powers ahead. But as Soviet agriculture is forcibly collectivized, at significant human cost, production drops by 30 percent.

1941-1945: During World War II, the Red Army successfully repulses Germany’s invasion and itself marches west, annexing Poland, Romania, Hungary, and Eastern Germany. The USSR suffers an estimated 20 million deaths, but its part in the Allied victory helps consolidate the Communist Party’s grip on power. After the war, the USSR emerges as Europe’s greatest military power, and one of two global superpowers.

1946-1952: The loss of some 25 million people, especially young men, during the war, has profound social implications. In 1946 Stalin launches a policy of Zhdanovschina, a cultural war against innovation, modernism, and Western sympathies. Stalin sets about reconstructing the Soviet economy. The Fourth Five-Year Plan aims to rebuild the industrial base and exceed prewar production levels. With the Red Army’s blockade of occupied West Berlin, the Cold War begins. In 1949 the Soviet Union tests its first atomic bomb.

1953-1963:Nikita Khrushchev, named first secretary upon Stalin’s death, begins a period of cultural thaw and de-Stalinization in an effort to decentralize the Soviet system of repression and secrecy, and to realize the “dream of socialism with a human face.” The Virgin Lands Campaign aims to boost agricultural yields. The Warsaw Pact is created in 1955 to counter NATO, and in 1961 the Berlin Wall is erected.

1964-1975: Khrushchev is ousted, and Leonid Brezhnev is made first secretary. His regime focuses on recentralizing power and control. A timid reform of industry fails to alter the economic system’s declining efficiency and productivity. But when world oil prices skyrocket during the 1973 oil crisis, Soviet coffers fill up with hard currency that will help to prop up the Soviet economy for more than a decade. Brezhnev’s rule is a time of relative plenty. The minimum wage is raised, and the standard of living improves significantly. The five-day work week is introduced and basic holiday entitlement raised. The 1977 constitution enshrines the right to a private land plot.

1976-1985: Several strokes leave Brezhnev critically ill and he dies in 1982. The economy buckles under the burden of a renewed arms race with the U.S. and the Soviet invasion of Afghanistan. Stability turns into virtual paralysis as Brezhnev’s successors, themselves ailing, argue the merits of reform and inaction. Yuri Andropov dies in 1984, Konstantin Chernenko a year later.

1986-1988: Following his appointment as leader, Mikhail Gorbachev begins a campaign of openness in public life (Glasnost) and political and economic restructuring (Perestroika), while committed to socialist ideals. Managers of state enterprises are given some independence, certain private businesses legalized. But an oil-price collapse and an anti-alcoholism campaign deprive the state of major revenues.

1989-1991: Gorbachev’s relaxation of controls creates an economic halfway house. As output plummets, shortages, rationing, and queues grow increasingly severe. A desperate attempt to restore centralized planning proves unworkable. Boris Yeltsin becomes president of the Russian Republic in the first-ever election for a Russian leader. After a political struggle, Gorbachev resigns as general secretary of the Communist Party of the USSR (CPSU), and the CPSU is subsequently made illegal. The Berlin Wall falls, and Eastern Europe breaks free from communism and Soviet control. A loose Commonwealth of Independent States replaced the USSR, which is fragmenting along nationalist and ethnic lines.

1992-1995: Yeltsin tries to transform Russia’s economic system and social structure into a democratic market economy via Shock Therapy. The abolishment of state subsidies results in huge price rises. Hyperinflation hits, reaching 2,323 percent. State industry is sold through voucher privatization. Corruption and profiteering run rampant. Yeltsin suppresses an armed uprising by the Supreme Soviet and reimposes rule by decree.

1996-1999: A second wave of privatization dubbed Loans for Shares sees strategic state assets sold to a few magnates, nicknamed “oligarchs.” Their support helps Yeltsin overcome a resurgent Communist Party to be reelected president. His bankrupt government sells bonds at high interest rates to raise money, but the Asian financial crisis forces Russia to default on its debts, and in 1999 Yeltsin resigns.

2000-2003: With promises to reverse Russia’s decline, Vladimir Putin is elected president. Maintaining market reforms and instituting a tax overhaul to boost revenue and business, he attempts to steer Russia toward World Trade Organization membership. The oil industry booms. Putin consolidates his grip on power, delivering stability but raising fears of authoritarianism. Russia opposes the U.S.-led war in Iraq.

2008:Dmitry Medvedev is elected the third President of the Russian Federation. Putin is named Prime Minister for Life.

The presentation below summarizes the evolution of the Russian economy after 1991 when Boris Yeltsin became the first popularly elected president of Russia following the dissolution of the Soviet Union.

Hint:To view the presentation in fullscreen mode click the menu button on the far left and select “View Fullscreen”.

As we prepare to embed ourselves into this vast region it is important to consider the sudden and significant Societal, Political and Economic Transitions the region has experienced as it emerged from Soviet rule less than two decades ago

It is difficult to believe that – with this residency in Russia – we are rounding the final corner of the CCMBA program before we convene in Durham for the final residency.

NEXT STOP: RUSSIA!
Our global circumnavition takes us next to St. Petersburg, arguably one of the most beautiful cities in the world, created by Peter the Great and capital of the Russian Empire for more than two hundred years.

PREPARING FOR THE RUSSIA EXPERIENCE
This brief video should whet our appetite for the experience we are about to embark upon next month. Russia’s vastness is almost unimaginable. It is by far the largest country in the world, covering more than ninth of the Earth’s land area and 9 time zones.

BLOG OUTLINE:
As was the case in London, Dubai, Delhi, and Shanghai we have developed this set of blog pages with rich-media content that we believe you will find relevant to the topics we will be discussing during our time in St. Petersburg.

We encourage you to review the contents of this blog and to post any comments, questions, or issues that come to mind as a result of having done so. Also, if you have good resources to add to the discussion, please be sure to include them in the Comment Section.

It is our sincere hope that we begin a robust virtual dialogue via this blog that we can synthesize during our time together at the residency.